The good news is that we have reduced overall risk, but that might just
have pushed up large, unlikely risks. To some extent we are dealing with
a luxury problem: when small disasters happen all the time we do not have
the time to plan for the big ones. But by reducing small disasters we
might set ourselves up for bigger ones. In the case of forest fires preventing
small ones leads to a build-up of combustible debris on the forest floor
that eventually leads to a major conflagration. In the case of banking
systems we might prevent banks from going bust, but that adds to the inefficiencies
and distributed risk of the whole system. The expansion of antibiotics
resistance and global transmission rates is setting us up for a higher
risk from pandemics.

Another important realization was that fat tails are dangerous. Many
disasters have a "fat tail" distribution where the total number of causalities
over time is dominated by the largest disaster, not the median disaster.
Some disasters like earthquakes probably have a cut-off, but pandemics,
wars and genocides could potentially go all the way up to the total human
population. Governments may be best at managing median disasters, not
the extreme ones where no old rules apply - here we need entirely new
approaches such as deliberate decentralization and in-depth resiliency.

Perhaps the most up-and-close risk right now is flu pandemics. While
the EU has good chances of resisting it due to a generally healthy population,
side-effects such as panicked closing of borders, economic trouble and
breakdowns in the health sector are a real risk. Worse, different countries
have different levels of resiliency and planning, and during a serious
pandemic this could lead to intra-EU problems.

Unfortunately decision-making about risk is hard. Often risk discussions
are actually proxies for ideological discussions, and government programs
about risk often become hijacked by various interests. We are under-investing
in dealing with uncommon or "unthinkable" disasters, we allocate resources
based on biased probability or harm estimates and we might overreact when
something happens. But recognizing that occasionally overwhelming disasters
happen might actually be helpful for constructing a truly resilient EU
health care system. Instead of perfect service under all conditions we
should look for graceful breakdown, decentralisation and flexible approaches.
That way the bangs and whimpers might be turned to merely an ouch.back to toppermalink

Do
we need bottled water?
25 JUL 2008  American consumers have started to do what the ecological
activists had been pushing them to do for years now  to drink
more tap water and less bottled water. This, however, seems to be
a result of the financial crisis and expectation of lower incomes.

Both Coca-Cola and PepsiCo, the two biggest producers of bottled water
in the US, are experiencing lower sales. The sales in Europe, where the
financial crisis has not yet hit so bad, seem to be quite stable. The
US market responds to this new situation in various ways  some US
restaurants have stopped offering bottled water to their customers. Similarly,
state offices encourage their employees to drink more filtered tap water
and some even prohibit purchases of bottled water with taxpayers' money.
To promote their ecological goals, Marriott International bought its employees
bottles for long-term use that can be refilled at various places throughout
the company.

Seeing the way people respond to income changes, it seems that purchasing
bottled water is more a matter of lifestyle than health. If people believed
that bottled water truly is better for their health  as the producers
of these products would like us to believe - they would surely not scratch
it off their grocery lists so quickly. Demand for products which are of
great potential importance for your health should not be very income-elastic.
After all, there does not seem to be an overwhelming evidence
of particular health effects associated with drinking bottled, as opposed
to tap, water.

Let me not be misunderstood: I am not one of those who see bottled water
as a threat to the environment. If people are willing to pay for a bottle
of Dasani (which is, it seems, purified tap water), so be it. The current
development shows that the alleged problem with environmentally damaging
and  in the eyes of some  wasteful consumption, will most
likely take care of itself.back to toppermalink

The
devil may (Medi)care 22 JUL 2008  Both US presidential candidates place special
emphasis on health reform (here's a great
summary by our friend Grace-Marie Turner), but there has been little
discussion on how to tackle the existing behemoth systems, in particular
the "500-pound gorilla"known as Medicare which accounts for
20 per cent of health care spending. Moreover, Medicare's rules are to
a large extent adopted by private insurers for determining coverage and
reimbursements.

As pointed out in a recent briefing
paper by our AEI colleague Joe Antos "as Medicare goes, so goes
the nation". As with pension reform (Social Security) there is talk
of money in a trust fund (you wish), but as Medicare offers universal
coverage to the population 65 and over, financing will become acute when
the baby-boomers start retiring in 2011 (i.e., in 3 years). The new president
would do well to launch comprehensive, savings-based reforms on both counts
if he seeks re-election.

Here is another good AEI
article to remind us about the true nature of the US system. Unfortunately,
the obvious bears repeating: no, Medicare is not market-based. Yes, repealing
price controls would be beneficial for our health.back to toppermalink

The US National Institute of Mental Health (NIMH) wants to investigate
chelation
therapy against autism in children. Chelation uses certain chemicals
to bind and remove heavy metals from the body. The researchers did not
propose the study because they think it is an effective therapy, but because
many parents think heavy metals are the cause of their children's problems
and give them chelation treatments anyway.

Scientific evidence for a heavy metal link to autism is very weak (for
example, autism does not occur when children are subjected to mercury
poisoning) and there are some known
risks with chelation since it can remove necessary metals such as
selenium, calcium and copper from the body. NIMH director Tom Insel explains,
"we were getting reports that this was a therapy in broad use and
there were very substantial questions about both its efficacy and its
safety". Unsurprisingly there is criticism about the morality of
testing a therapy almost certain not to work on children, especially since
there is some risk involved. Critics think NIMH has simply caved in to
a loud pseudoscience lobby.

Karl Popper famously pointed out that scientific knowledge only grows
when we refute erroneous theories. While proper medical trials aim at
disproving the therapy if it actually is useless, the normal expectation
is that it will work  undertaking expensive trials for testing what
will not likely work is simply wasteful, and there is a huge range of
just barely possible theories that could be tested. In this case the goal
is to demonstrate to the world that a particular activity is useless or
harmful. That could be a justification for the testing if a refutation
(or success) would give benefits larger than the cost. But even if the
study successfully refutes chelation it is unlikely to convince parents
or the chelation enthusiasts: their position is not founded on scientific
thinking but rather on a pre-scientific idea of impurity as a cause of
disease.

A study would still give some knowledge, but whether this is enough
to justify the cost and risk is hard to tell. Maybe the most important
use would be to show that the scientific community actually does take
public complaints seriously. But trust is not arbitrarily valuable: in
a system such as the EU the temptation to fund goodwill-raising research
may be much stronger than the desire to actually focus on what is cost
effective.back to toppermalink

Disease
map, on-line edition
16 JUL 2008  Apart from regular news websites, the internet offers
other sources of information about infectious diseases, such as various
blogs and chatrooms. If this information was collected and put in an aggregate
form, it could possibly be used for early disease warning and precaution.
HealthMap is an online
project of Harvard Medical School Children's Hospital Boston, which
does exactly that. Its co-founder John Brownstein explains:

"It's a disease-mining system that uses the Internet to look
for outbreaks going on around the world, bringing all this information
together in one view."

HealthMap shares
its findings about global health for free with anyone who is interested
in them. Apart from English, it surfs the internet also in Chinese, Spanish,
Russian and French. To show an example of their work, Brownstein says:

"We've traced the earliest reports of SARS back to Internet
chat rooms where people were talking about this problem going on in Guangdong
Province  The only information coming out to the rest of the world
was through such informal channels, but nobody paid much attention at
that point."

All the data that are gathered by the system are then used to create alerts
for various regions throughout the world. A regular user can look up the
news collected for his or her area. The internet indeed offers a lot of
potentially useful information which can be aggregated in the real time
at very low cost. The HealthMap seems to be a very promising way of making
that information available to millions of individuals around the globe.back to toppermalink

The
price of health 10 JUL 2008  The French administration is currently facing
protests from patients with some 30 long-term ailments (notably cardio-vascular
diseases, cancer, diabetes and mental illnesses) as reimbursements for
some medicines (qualified as "comfort" and not essential) would
be only 35 per cent instead of 100. According
to CNAM (the public health fund), this population will represent 12
million people in 2015 and 70 per cent of expenditure.

Seeing that the deficit of the public health budget is today 95 billion
euros (or 5.2 per cent of GDP), as economist Jacques Delpla asked in Les
Echos last week, should we simply ban
deficits? Well, yes and no. It all depends on if we consider the present
third-party payment system, or another in which individuals take greater
responsibility for their health and therefore for spending.

The RAND Corporation Health
Insurance Experiment (1971-1982) remains the most comprehensive of
its kind and provides intriguing keys to the problem. Two patient groups
were studied: the first got "free" coverage, and the second
could choose between purchasing care or other services for the first few
thousand dollars of expenses (deductible). The result: the second group
chose to reduce expenditure by 25-30 per cent without any negative impact
on health. The first group consumed 43 per cent more health care, although
this provided no measurable value.

So yes, the current system encourages over-consumption (somebody else
is paying supposedly) and then tends to crack down on those who really
need care. No, the appropriate level of health care spending should not
be a political decision. But it is today!back to toppermalink

No Trials Please, We're British09 JUL 2008  Big
drug companies shift trials from the UK. The reason? Too few patients
receive cutting-edge drugs like Avastin or Erbitux, making it impossible
to run trials against this "gold standard" control group of new, hopefully
even better drugs. NICE has for example denied coverage for using Avastin
for colon, lung and breast cancer due to it being seen as not cost-effective
enough (but also likely due to Roche
not cooperating). At least 20 trials have not gotten off the ground
since the start of last year due to the difficulty of recruiting patients.
Harpal Kumar, head of Cancer Research UK, said: "In the long-term there
is a serious risk that if we get to the point where none of the new drugs
are being used in the UK, the trials won't be done here."

Cost-effectiveness is a subtle issue, since costs for drugs in the UK
are not set through a market mechanism. The UK government unilaterally
scrapped a price contract with industry halfway through its term, imposing
a 5% cost cut. As any first-year economics student can tell, this will
produce shortages one way or another. The utility of a drug is also hard
to estimate, making the decisions of NICE an unpredictable risk to companies;
the cost of this risk is added to the cost of other drugs. The result
is fewer and more expensive drugs available to patients and fewer clinical
trials. These factors conspire to make the UK an unfriendly place for
pharma companies, who will naturally go elsewhere. No wonder the
industry is languishing. Not exactly the result intended by a government
trying to make the country an attractive
place for drug developers..back to toppermalink

More
cross-border healthcare?
07 JUL 2008  Europe needs cross-border competition in healthcare.
The cost differentials, even for very trivial medical procedures, are
often huge and could be cut down by patient travel to foreign countries
to receive treatment. This is especially the case for minor surgeries
and dentistry.

Of course, cross-border healthcare provision has its risks, too. Namely,
if reimbursement rules were set too liberally, insurance companies would
have to pay for useless procedures that may not even exist in the patient's
home country. Yet it is relatively easy to avoid such pitfalls and it
seems that the
Commission's package successfully avoids them. Namely, it plans to
apply only to those treatments that are available at home and it sets
the reimbursement limits to the level reimbursed in the home country.
These two features appear to be sufficient to prevent cross-border competition
to be a drain on health insurance schemes, which are oftentimes provided
publicly.

A caveat might be appropriate: We observe important cross-country price
differentials in the service sector even despite possibilities of cross-border
competition. Traveling, search, and overcoming the language barriers are
costly and some individuals may find the idea of traveling for cheap services
to be too difficult to digest. This is even more so in the case of healthcare,
which is loaded with a heavy emotional content. Most people would consider
me a terrible cynic if I sent my aging grandmother to a foreign country
for a surgery, just because it is cheaper. There is nothing wrong with
that view; it simply shows that the law of one price should sometimes
be taken with a grain of salt. Nonetheless, mobility and cross-border
competition should be encouraged, not hampered; and it is commendable
that the EC has started to adopt this plan.back to toppermalink

NHS
tide turning
02 JUL 2008  This week, the UK government is publishing its supposed
masterplan for the NHS. It's far from being all bad  any ideas which
give patients more choice should be welcomed.

But there's a more fundamental problem, which is the very basis of the
NHS  a state funded, state driven healthcare service. That this
is now an anachronism is made all the more clear by a new book from Dr
Helen Evans, formerly of CNE and now director of Nurses for Reform.

Sixty
Years On: Who Cares for the NHS? is based on a new survey of 100 leading
British health experts. The research shows that  speaking off the
record  an overwhelming majority of Britain's health elite accepts
a much greater role for private provision  including private hospitals,
clinics, GP services and dentists. They call the NHS "inequitable",
"two tier", "rationed" and "costly", and
a majority also believes it is too "monopolistic" and wants
to see a much greater role for private insurers and even the introduction
of personal health savings accounts.

As Dr. Evans puts it: "The results show that the world has moved
on from the 1940s. Opinion formers are now much more aware of the in-built
failures of the NHS. As people's expectations increasingly outpace what
the state can deliver, and as nationalised healthcare loses the battle
for hearts and minds, behind the scenes our opinion formers are starting
to seriously consider market alternatives."

A
la recherche de l'excellence perdue 30 JUN 2008  It would seem that the French are slowly realising
that their country is no longer on top in every area. Last time the OECD
published its ratings on secondary and higher education, it turned out
that even in mathematics French students are lagging behind. Worse, in
a Shanghai University survey, French universities ranked in 39th position.

To know what is to be done, you need to know what is going on. Our friends
at the Institut Montaigne last week handed over confidential
data to the weekly L'Express, revealing the best research laboratories
in France (A+ rating). (Although not included in the article, 15 per cent
of them received a 'C', meaning that their existence is questioned?).

For biomedicine and health, there was one striking result : the centre
for molecular genetics at the University of Paris VI has 69 researchers
; but only 44 of them are publishing (this is the faculty which sneaked
into 39th place in the Shanghai survey!). What says the Minister? "Making
research valuable and patenting are France's weak points" and that we
need to further pool research results. Also, the Grandes Ecoles "don't
have enough researchers".

The Minister recently recruited 475 (!) foreign experts to evaluate
the French system, but first she had to make sure that their per diem
was increased to 120 euros, up from the going rate of 60  Bon courage!back to toppermalink

/td>

10 March 2008CNE
HEALTH LUNCHEON Speakers: Frank Lichtenberg, Tari HaahtelaLocation: BrusselsTopic: New Medicines and new Technologies: a Saving or a
Burden?
Details